Dallas-based Southwest Airlines will haul cargo on international flights for the first time one year from now, thanks to the airline replacing its point-of-sales system and back office system to accommodate international air cargo.
Source: Southwest Airlines
Southwest Airlines will haul cargo on international flights for the first time one year from now, Wally Devereaux, senior director of cargo and charters, said at an industry conference Tuesday.
The Dallas-based airline flies about 4,000 flights per day, but is a relative newcomer to international markets after acquiring AirTran and beginning service to Mexico and the Caribbean.
The U.S. Department of Transportation recently awarded Southwest slots to fly to Cuba following a thaw in diplomatic relations with the United States that is slowly opening up trade and travel opportunities.
“The challenge we have is our back office systems that we’ve built to support our cargo product over many years are built for domestic. So we’re replacing our point-of-sales system and our back office system to be able to accommodate international air cargo,” Devereaux said in an interview after participating in a panel discussion at a summit on air cargo issues organized by the International Air Transport Association’s U.S. division (Cargo Network Services) in partnership with several other trade associations.
The new information technology system will allow Southwest to share electronic airway bills, transmit and receive messages directly with U.S. and other customs authorities, and support different currencies. The existing system is a closed one and can’t communicate with outside systems, making information exchange with regulators and business partners more difficult.
The upgrade will also allow freight forwarders to book shipments online for the first time. Customers today have to show up at a Southwest warehouse and physically tender the shipment to the airline, which will put it on the next available flight based on the specific product (next-flight guaranteed, rush and standard) selected.
Southwest is building the new system in house after exploring several commercial off-the-shelf products, Devereaux said.
“Because of the unique way Southwest operates, we just decided that it would be better to replace the system we have by building a new one,” he said.
Devereaux declined to give a figure for the IT investment, but said it demonstrates the company’s commitment to airfreight.
Southwest, the second largest U.S. carrier based on passenger emplanements, generated $178.6 million in revenue from cargo last year and is projecting similar results this year.
The airline anticipates having more international destinations in five to 10 years from now that could be attractive for cargo, which is a high-margin business, Devereaux said.
“And we want to make sure we can grow into those markets,” he added.
The U.S. domestic market for air cargo has been much less robust than international most of this century, with post-9/11 security requirements and improved ground service pushing much of the heavy freight to truck and airlines mostly deploying narrow-gauge aircraft. However, growth in parcel business is providing increased business for passenger carriers hauling belly freight.